Demand-Path Optimization: The Flip Side Of Supply-Path Optimization

“The Sell Sider” is a column written by the sell side of the digital media community.

Today's column is written by Erik Requidan, vice president of programmatic strategy at Intermarkets.

As marketers and agencies become more selective about inventory and demanding of transparency, publishers need to respond in a way that makes sense not just for themselves and their clients, but also for the ecosystem.

Supply-path optimization (SPO), the phrase coined by AppNexus’ Brian O’Kelley, refers to the ways that advertisers optimize the path to the advertising inventory they want. Buyers are selecting fewer places from which to buy, with fewer URLs and publishers. While these decisions are based largely on cost, they’re also driven by a desire for transparency and safe, high-quality media. It’s one way that buyers and sellers are moving closer in their thinking and strategic planning, while reducing the number of middlemen in any given transaction.

Publishers are effectively following the same process from their corner of the industry and working in the opposite direction. Via demand-path optimization (DPO), publishers are optimizing the path from supply-side platforms (SSPs), exchanges and ad networks to trade desks, demand-side platforms (DSPs) and brands that have taken their buying in-house.

DPO is the mirror image of SPO; we’re just optimizing our way across the Lumascape from the opposite corner. We’re meeting in the middle, with advertisers and publishers working more or less directly, using exchanges and SSPs for pure utility.

The result is that the media-buying process may either use fewer intermediaries or use them more effectively. This gives publishers and buyers more control of both the process and the inventory – and will ultimately result in benefits for all involved and contribute to a more harmonious ecosystem.

How Did We Get Here?

It’s a big movement that impacts the entire ecosystem, and a lot of it is fueled by header integrations. There are optimization paths based on the clarity that has resulted from header integrations – special buyers looking to pay more to access premium inventory – and publishers can build new opportunities for them.

Early private marketplaces (PMPs) and direct deals really helped build the intelligence around this. Publishers learned early on that if they placed their premium inventory in a special environment where motivated buyers could easily transact, they’d simply bypass the traditional channels and purchase. If advertisers showed a preference for PMPs, publishers accelerated in that direction. And that’s what’s happened: They wanted more access, so publishers gave them more.

Header integration was the clear next step in the continuum of private access and private deals. Now buyers want to speed up the process even more, while gaining greater access to supply. Header bidding has made that possible.

The fly in the ointment is that what they’re promised isn’t always what they get. Buyers have been let down by private deals, and that’s why they’re demanding transparency. Buyers want to know exactly what they’re getting. Fair enough.

When publishers open up all their inventory through that premium auction process, they are able to monetize it in the most effective way, while giving buyers the transparency and inventory they want.

DPO In Action

It’s important to remember that although a publisher may have accumulated business intelligence, the dollars won’t automatically flow. Many DSPs and trade desks are taking fewer meetings because sellers have not been properly trained to have the right conversations with them.

Demand partners have preferences, just as publishers have preferences for SSPs or exchanges.

Publishers can identify their top exchanges and buyers and collect buying activity data. From that, they can extract what makes each exchange unique in the form of buyers, looking at which brands and advertisers are unique within that buyer set.

Publishers must then engage with these buyers face to face and understand their needs, including price, formats, volume, budget, priority in server, win/loss analysis, etc. This information arms the seller with more than a rate card; the seller now has a toolkit of options that can strengthen that ongoing buyer relationship.

Publishers now operate with much of the business intelligence their SSP partners have previously managed. That’s not to say that exchange partners and SSPs no longer have value. They are innovating and providing value across a number of other fronts, such as ensuring quality supply is available, helping to facilitate deals and relationship introductions, combatting nonhuman traffic and fraud, excluding buyers with bad track records and educating holding companies.

A Plus For Advertisers And Publishers

Because DPO is an optimization process, there are many benefits for both parties – and everyone else along the way.

For advertisers, it’s important to understand that their supply-side partners want to make it as convenient as possible to access and buy the inventory they want most. Publishers and media companies stand to gain revenue by making the buying process easier and more efficient and transparent for their advertisers.

Publishers, make no mistake: If you’re not engaging in this kind of optimization, you need to start now. The process of optimizing will help you understand which partners will best help you connect directly with buyers. Offering customers greater transparency and trust across the buying process will yield long-term success.

DPO helps publishers and media companies put the best opportunities in front of brands and advertisers that match their supply-side optimization. Working in tandem with the demand side, we’ll contribute to a better-functioning, more transparent ecosystem.